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Gold, Oil and EURUSD Weekly Analysis - Week 32

Gold prices settle July near all time highs


The precious metal recovered from the losses on Thursday as prices closed back near the previous all time high record at 1971. The gains in the precious metal continues amid a weakness in the US dollar and the weak economies around the world. This has prompted central banks to inject more liquidity into the markets, leading to fears of inflation.

For the moment, the bias in gold prices is to the upside. But the precious metal will have to post further gains to continue the rally. Failure to do so could possibly push the precious metal into a consolidation near the highs. This might lead to price action likely to post a correction.

Watch the support level near 1900 which remains critical to gold prices at the moment. As long as price is trading above this level, we expect the gains to continue. To the upside, the next main target comes near the 2000 level.

Crude oil trades flat following declines from Thursday

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Oil prices barely moved on Friday, following the declines on Thursday. The weakness in the oil markets could possibly see the commodity likely to turn lower. However, prices rebounded after slipping to lows of 38.74. We could expect to see further declines in the near term that might push prices to test the lows more firmly.

The current outlook for the oil markets comes despite the recent data earlier in the week showing a strong build up of inventory. There are rising fears that the demand might continue to feel for crude oil. Despite OPEC and Russia cutting oil production just recently, prices have barely moved.

The downside risk for oil prices therefore increases even more. For the moment, the 37.5 - 38.00 level is holding up. We might get to see prices slipping a bit more, but the declines might be capped at this level.

Euro settles the month end on a weaker note


The euro currency is surprisingly trading weaker during the last trading day of the month. Price action briefly tested highs of 1.1900 on an intraday basis before pulling back lower. Despite the bearish close on Friday, the overall bias in the EURUSD remains unchanged.

We could expect to see price action once again reversing to the upside. The main support is at the 1.1600 level. The current declines, if they persist could see the EURUSD slipping to this level in the short term. But a rebound prior to testing the 1.1600 level is also quite possible.

To the upside, we need to see evidence of the strong bullish momentum in the common currency. Above the 1.1900, the EURUSD is likely to target the 1.2000 level in the medium term outlook. But at the same time, the strong increase in the currency also exposes the potential of a correction.

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